Natural Gas

This morning in metals news: the U.S. Senate on Tuesday voted to pass a $1 trillion infrastructure bill; the Consumer Price Index for All Urban Consumers rose once again in July; and, finally, the Energy Information Administration forecast lower-than-average natural gas inventories heading into the winter heating season.

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Senate passes $1T infrastructure bill


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After a lengthy back and forth, the U.S. Senate passed a $1 trillion infrastructure bill Tuesday by a vote of 69-30.

“There is a discrepancy in historical Federal investment between highways, aviation, and intercity passenger rail,” the bill text reads. “Between 1949 and 2017, the Federal Government invested more than $2 trillion in our nation’s highways and over $777 billion in aviation. The Federal Government has invested $96 billion in intercity passenger rail, beginning in 1971 with the creation of the National Railroad Passenger Corporation. Intercity passenger rail Federal investment is only 12 percent of Federal aviation investment and less than 5 percent of Federal highway investment.”

United States Trade Representative Katherine Tai said the deal marked a step closer to “historic, once-in-a-generation infrastructure investments.”

“The bill will improve our roads, bridges and ports, build resilient energy networks that combat climate change, and strengthen our supply chains,” Tai said. “Finally, the strong Buy America provisions will support our workers and revitalize domestic industries while maintaining America’s competitive edge.”

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Commodities in the form of metals and agricultural products are not the only goods facing price inflation this year.

Power costs have been driven higher by a combination of pandemic bounce-back, extreme weather in the U.S., Europe and Russia this summer, and supply constraints.

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Natural gas prices surge

natural gas tap

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According to the Financial Times, natural gas prices in Europe and the U.K. have soared to some of the highest levels on record. The U.K. is facing the highest price since 2005. Meanwhile, in Europe, prices have hit €40 per megawatt hour for the first time.

Prices in Asia are also high as countries try to attract cargoes of liquefied natural gas to meet strong demand. The spot price of LNG cargoes rose above $15 per million British thermal units (MMBTU), according to the Financial Times.

Prices in Europe and the U.K., when converted, are near $14 per MMBTU, the post reports.

Supply and demand

Demand is undoubtedly a driver, but so is constrained supply.

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This morning in metals news: copper prices have stabilized over the last month; U.S. natural gas prices have surged to their highest level since 2014; and, lastly, Cleveland-Cliffs released its second-quarter results.

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Copper prices stabilize

list of commodities prices

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MetalMiner Senior Forecast Analyst Maria Rosa Gobitz earlier this month covered the copper market, for which she noted prices had started to consolidate.

The LME three-month copper price had surged to an all-time high May 10 of around $10,700 per metric ton. The price proceeded to cool over the next 5-6 weeks, falling as low as $9,070 per metric ton.

The copper price then consolidated and has traded largely sideways over the last month. On Wednesday, the price closed at $9,244 per metric ton, or up 1.92% month over month, per MetalMiner Insights data.

Natural gas prices surge

Meanwhile, in energy news, U.S. natural gas prices have reached their highest level since 2014, the Energy Information Administration (EIA) reported.

“In June, the U.S. natural gas spot price at the Henry Hub averaged $3.26 per million British thermal units (MMBtu), the highest price during any summer month (April–September) since 2014,” the EIA reported. “Prices in July have increased from June, averaging $3.67/MMBtu through the first two weeks of July. Spot prices for July 14 in every one of the more than 175 pricing hubs tracked by Natural Gas Intelligence exceeded $3.00/MMBtu.”

Cleveland-Cliffs releases Q2 results

Cleveland-Cliffs reported net income of $795 million during Q2 2021, compared with a loss of $108 million during Q2 2020.

“In the second quarter of 2021 we achieved all-time quarterly records in revenue, net income, and adjusted EBITDA,” Chairman, President and CEO Lourenco Goncalves said. “The numbers unequivocally confirm our efficiency in operating the new footprint, resulting from the integration of the two major steel companies acquired in 2020 as a single and indivisible mining and steel company. They also demonstrate our flawless execution in ramping up our state-of-the-art Direct Reduction plant in Toledo to the current level of production above nominal capacity.”

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This morning in metals news: Rio Tinto reported its Q2 production results; U.S. unemployment rates were down in seven states in June; and, lastly, the U.S. once again led the way in petroleum and natural gas production last year.

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Rio Tinto reports Q2 production results

Rio Tinto sign

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Miner Rio Tinto recently reported its Q2 production results, reporting Pilbara iron ore production of 75.9 million tons.

The total marked a 9% year-over-year decline and a 1% decline compared with the previous quarter.

Bauxite production reached 13.7 million tons, or down 6% year over year and up 1% from the previous quarter.

Unemployment falls in seven states

Unemployment rates fell in seven U.S. states in June, the Bureau of Labor Statistics reported.

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This morning in metals news: the U.S. steel sector’s capacity utilization rate rose to 82.9% last week; Cleveland-Cliffs will demolish the site of the former AK Steel Ashland mill; and, lastly, the Energy Information Administration sees higher natural gas prices in the year ahead.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US steel capacity utilization rises to 82.9%

hot rolled steel

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The U.S. steel sector’s capacity utilization rate reached 82.9% last week, the American Iron and Steel Institute (AISI) reported.

Production last week totaled 1.84 million net tons, or up 0.3% week over week. The weekly production total also marked an increase of 44.6% year over year.

For the year to date (through June 19), U.S. mills produced 43.22 million net tons of crude steel, or up 14.2% year over year.

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This morning in metals news: China auto sales cooled in May, according to the China Association of Automobile Manufacturers; production of crude oil and natural gas in New Mexico reached a record high in March; and, lastly, labor productivity fell in 13 of 29 service-providing industries in the U.S. last year.

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China auto sales drop

cars on the road in Shanghai, China

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China auto sales dropped in May on a year-over-year basis for the first time since March 2020.

Auto sales in China fell by 3.1% year over year in May 2021, the China Association of Automobile Manufacturers reported this month.

Furthermore, May sales declined by 5.5% month over month. May sales reached 2.13 million vehicles. For the January-May period, sales reached 10.88 million vehicles, up 36.6% year over year.

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This morning in metals news: Oslo-based Norsk Hydro has reached an agreement with a Brazilian university to explore the potential uses of bauxite residue from its mining operations; US natural gas-fired generation declined over the first four months of the year; and existing-home sales fell in April.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Norsk Hydro to explore uses of bauxite residue

Norsk Hydro logo

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Norsk Hydro recently announced it has reached a research agreement in which it aims to research uses of bauxite residue from its mining operations in the Brazilian state of Pará.

“The research will focus initially on using this waste in the production of cement floors that prove to be advantageous from the environmental point of view and throughout their life cycle,” Norsk Hydro said.

It will focus on potential uses in the construction sector, particularly in cement components.

The Laboratory of Microstructure and Eco-efficiency of the Department of Civil Construction Engineering of the Polytechnic School of University of São Paulo (USP) will conduct the research, Norsk Hydro said.

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This morning in metals news: Century Aluminum released its Q1 financial results; meanwhile, copper prices continue to surge; and natural gas production plummeted during what was a frigid February in the US.

The MetalMiner Best Practice Library offers a wealth of knowledge to help buyers stay on top of metals markets.

Century Aluminum releases Q1 financial results

earnings sign

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Century Aluminum reported a Q1 net loss of $140 million, compared with a Q4 2020 net loss of $35.5 million.

“First quarter results were negatively impacted by $87.4 million of exceptional items, in particular $92.7 million of unrealized losses on forward derivative contracts (net of tax),” the firm said.

Meanwhile, the firm reported net sales increased by 14% to $444 million, citing higher aluminum prices and regional premiums.

President and CEO Michael Bless said the firm is committed to developing its “low-carbon aluminum products as well as the expansion of our smelters’ exposure to renewable power resources.”

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March 2021 MMO cover pageThis morning in metals news: the March 2021 Monthly Metal Outlook (MMO) report is out; meanwhile, annual natural gas production declined in 2020; and, finally, pending home sales declined in January.

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March 2021 MMO report

Every first of the month, MetalMiner publishes its Monthly Metal Outlook forecast report, available only to subscribers.

The report includes buying strategies for 10 key metals: aluminum, copper, zinc, tin, lead, stainless/nickel, HRC, HDG, CRC and plate.

For more information about the monthly report and how to subscribe, visit the MMO landing page.

Natural gas output down

Natural gas production fell 1% in 2020, the Energy Information Administration (EIA) reported.

“U.S. natural gas production—as measured by gross withdrawals—averaged 111.2 billion cubic feet per day (Bcf/d) in 2020, down 0.9 billion Bcf/d from 2019 as result of a decline in drilling activity related to low natural gas and oil prices in 2020,” the EIA reported.

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gold price

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This morning in metals news: the gold price continues to slide; the Federal Reserve released its latest Monetary Policy Report; and the record freeze in Texas is disrupting natural gas production.

Gold price weakens

After surging to around $2,035 per ounce in August, the gold price for the most part trended in a band between $1,850-$1,950 through the balance of 2020.

Of late, however, the gold price has retraced, even falling below the $1,800 threshold.

Gold closed Thursday at $1,775 per ounce.

The gold price has fallen, even as the US dollar has also continued to lag. The US dollar index reached 90.23 today, compared with just over 99 a year ago.

One thing worth monitoring is growing interest in cryptocurrencies, particularly Bitcoin. The cryptocurrency has surged above the $53,000 mark and jumped by approximately 80% this year.

Amid a run of loose monetary policy from central banks around the world, some investors will look to other assets. That could mean they’ll even look to assets other than time-tested safe havens, like gold.

It’s unlikely that the US dollar will lose its status as the global reserve currency anytime soon. However, cryptocurrencies like Bitcoin could potentially weigh on gold, leading some investors to rethink traditional safe-haven asset strategy.

A lot can change in a year. In February 2020, Bitcoin hovered around just under $10,000.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Fed releases Monetary Policy Report

Speaking of currency, the gold price and monetary policy, the Federal Reserve today released its latest Monetary Policy Report.

The report notes the labor market recovered as the year progressed. However, the pace of the recovery slowed down significantly late in 2020.

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